The Impact of Adopting ERP on Key Performance Indicator by the Mediation Effect of Critical Success Factors and Performance Indicators in Automobile Ancillary Industries

Abstract

To meet the very high expectation of the customer in the competitive and luxury Automotive global market segment, the organization requires flexibility, business integration and automation of the business process which will reduce the cost and time in various business processes. An Enterprise Resource Planning (ERP) system plays a major role in improving the performance of the supply chain. Some studies expressed that Organizations, which have good ERP systems, generate higher profit because of reduction in Cost and Time. However, there is a lack of scientific research carried out that effective ERP Implementation leads to better business performance which helps to attain the Key Performance Indicator set by the organization. In this paper, we attempt to determine how the companies that have adopted ERP Systems in Automobile Auxiliary Industries have improved their business performance, by evaluating and analyzing the association between the performance indicators Time Reduction and Cost Reduction using Structural Equation Modeling (SEM) . The findings of the SEM research stated that, companies that adopted ERP system improves their business performance Indicator, particularly in relation to Key Performance Indicator. Furthermore, we found that the impact of ERP Systems Performance study absolute fit indices fits the sample data and reveals that the proposed model has the acceptable fit, by way of satisfying the recommended values.